17 countries in Europe are sharing a common currency: the Euro. This currency binds their economies very tightly and those countries form the most integrated part on the European Union, but there are huge disparities among them which poses very serious risks to this union. Eastern Europe countries such as Estonia, Poland, Bulgaria or Romania can still be considered developing economies as they joined the union only 10-15 years ago fairly shortly after the end of the Soviet Era . You also find mature post-industrial Economies, with France and Germany that are the regional heavyweights and with five smaller prosperous countries: Luxembourg, Netherlands, Belgium, Austria or Finland. Last but not least, there is the southern part of the Eurozone, with many countries in big trouble: Spain, Italy, Greece and Cyprus are now going through the worst economic crisis since the 1930s. They all have public debt exceeding 120% of their GDP and they all have unemployment rates in the range of 20% or more of the workforce (see link HERE) . Italy is a little better off than its Southern neighbors but the country’s long-term economic stability is questionable as its ratio debt to GDP is about 126% for 2012, the servicing of the debt leaving little to no freedom of maneuver to the newly elected government. France and Germany have been the motor of the European construction and they shared most of the economic burden to support the Southern and Eastern Europe since the 1980s. But we think they will not be able to go on much more subsidizing Southern Europe, which will lead to a big fracture inside the Eurozone. The reason is that France’s economy itself seems to be going nowhere. This week’s official figures are showing, again, a recession with a 0.2% contraction of the French GDP (see Bloomberg article HERE). At the same time the French unemployment is growing to a staggering 10.6%. With regards to public national debt, the evolution has been similar: France’s national public debt was 64% of the national GDP in 2006 but it reached a staggering 90.2% in march 2013 according to the Insee, French National Institute of Statistics and Economic Studies (see link HERE). Another interesting indicator to look at is the French National Index CAC40, and this index is 28% lower in May 2013 than it was in January 2000. So we are talking about deeply negative returns over a 13-year period, which is a complete disaster from an investor standpoint, as you can see below in the graph below (click on the graph to be redirected to CAC40 page on Yahoo finance).

This long-term degradation of France’s economy and public finances is symptomatic of a country that has shown complete inability to adapt to a changing world, and the current government shows not capacity to change things. The French state is huge and malfunctioning, with annual spending now stable at 56% of the country's GDP. Most of this huge budget is allocated to non-productive expenses such as serving interests of the public debt, pensions, unemployment benefits, health-care and keeping afloat many inefficient loss-making and state-owned companies. Instead of reforming this malfunctioning machine, the current socialist government is desperately trying to increase taxes to balance its budget. The government’s main targets being wealthy entrepreneurs and large US companies such as Yahoo, Google and Apple. Funny enough the government’s budget secretary who was leading the initiative against tax evasion has himself been accused in April of massive tax evasion and is now risking 5 years of prison (see full story HERE). So as you can see, France's economy is going nowhere right now. We are now reaching a tipping point. France has so many problems of its own to solve that it cannot afford much longer to keep its leading role in the EU. Germany remains a motor and a big lender but it cannot bear alone the burden to support economically the failing southern Europe and most of the smaller European economies have neither the will nor the critical mass that is required to provide this support. The last major European economy is the UK, but it will not help as the Brits are actually trying to leave the European Union! The Conservatives which are the ruling political majority presented two days ago the terms of a referendum to be held within a couple of years to ratify UK leaving the EU (see full story HERE).

So beware of the Eurozone, they are running into many years of trouble and nobody can tell today how this chaos is going to end.

Nonetheless not all is dark and bleak in Europe. Some smaller countries with the coldest climates of the continent have managed not only to stay away from this EU chaos but to position themselves extremely well in world economic rankings so they are thriving economically and can very well be regarded as very attracting for long-term investors:

Norway is an oil-producing country and does not belong to the political European union. The public debt is as low as can be and according to the World Bank the country’s GDP per capita ranks 3rd in the World , preceded only by the micro-states of Luxemburg and Monaco (see world bank data HERE). Unemployment in Norway is below 3%, so to say it is existent (see article source from Bloomberg HERE).

Sweden and Denmark are prosperous nations that benefit from regular investments from their Norwegians neighbors with whom they share the same basic Scandinavian language. Moreover neither Sweden nor Denmark are part of the Eurozone so they are not much affected but the Euro turmoil. Last but not least both the government in those countries have balanced budget with a low public debt (45% of GDP for Denmark, 38% of GDP for Sweden).

Switzerland is a very prosperous country, mostly thanks to the vitality of its financial industry but also thanks to the fact that despite its small size Swtzerland has managed to nurture industrial champions which are global leaders in their sectors and delivered stable growth during the pas decades. We are thinking of firms such as Nestlé, ABB, Roche and Novartis.

The conclusion is that the current outlook for Eurozone is bleak right now, and it is not going to be any better in the years to come, but the cold, or rather cool, countries of Norway, Sweden, Denmark and Switzerland remain very interesting for an investor. We therefore advise you to invest in Exchange Traded Funds (ETFs) to get exposure to these specific countries. Below is a list of funds that can be traded from the US markets and that will do the job: